Do go changin', says ex-employee to Microsoft

The market for shrink-wrapped PC software that you buy at the corner computer
store began its slow but steady slide into obscurity and irrelevance about the
time that Microsoft really hit its stride.

That was also the time of the internet wave, a phenomenon that Microsoft
co-opted without really internalising into product wisdom. While those qualified
to move the state of the art forward went down in the dotcom crash, Microsoft's
rigorous belief in business saved the day and the profits.

But the tide had turned, and a realisation that "the net" was far more
interesting than "the PC" began to dawn on consumers and enterprises.

During this period, most core Microsoft products missed the internet wave,
while claiming to be leading it.

Office has yet to move past the document abstraction, despite the world's
widespread understanding that websites (HTML, HTTP, various embedded content
types, and Apache mods) are very useful things. Windows has yet to move past its
PC-centric roots to capture a significant part of the larger network space,
although it makes a hell of a good client. Microsoft developer tools have yet to
embrace the loosely coupled mindset that leading-edge developers apply to work
and play.

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Microsoft's reluctance to adopt networked ways is understandable. Its
position of advantage has been built over the years by adhering to the tenet
that software running on a PC is the natural point at which to integrate
hardware and applications.

Unfortunately, network protocols have turned out to be a far better fit for
this middle-man role, and Microsoft, intent on propping up the PC franchise, has
had to resist fully embracing the network integration model.

This denial has left a vacuum into which hardware companies, enterprises and
disgruntled Microsoft wannabes have poured huge quantities of often inferior,
but nonetheless requirements-driven, open source software.

Microsoft still builds the world's best client software but the biggest
opportunity is no longer the client. It still commands the biggest margin but
networked software will eventually eclipse client-only software.

As networked computing infrastructure matures, the PC client business will
remain important in the same way that vehicle manufacturers, rail carriers, and
phone companies remained important while their own networks matured. The PC form
factor will push forward; the Pocket PC, the Tablet PC, and other forms will
emerge.

Will Microsoft continue to convince its partners that software is distinctly
valuable by itself? Or will the commodity nature of software turn the industry
on its head?

In a maturing market, software expertise still matters, and Microsoft may be
able to sidestep irrelevance as it has in the past. To continue leading the
pack, Microsoft must become innovative quickly.

If the PC is all that the future holds, then growth prospects are bleak.

Microsoft's recovery from external perceptions as a paranoid, untrustworthy,
greedy, petty, and politically inept organisation will take years. Being the
lowest-cost commodity producer during such a recovery will be arduous, and will
have the side-effect of changing Microsoft into a place where marketers and
accountants, rather than visionaries, will call the shots.

If Microsoft cannot become innovative quickly enough, or adapt to embrace
network-based integration, the threat that it faces is decreased software
profits caused by the open source movement.

This is not just Linux. Linux is certainly a threat to Microsoft's imperfect
server software now (and to its desktop in the not-too-distant future) but open
source software in general, especially running on the Windows operating system,
is a much bigger threat.

As the quality of open source software improves, there will be less reason to
pay for core software-only assets: Microsoft sells Office (the suite) while
people may only need a small part of Word or a bit of Access. Microsoft sells
Windows (the platform) but a small organisation might just need a website, or a
fileserver.

It no longer fits Microsoft's business model to have many individual
offerings and to create new application software. Unfortunately, this is exactly
where free software excels and is making inroads.

Digging in against open source commoditisation won't work - it would be like
digging in against the internet, which Microsoft tried for a while before
getting wise.

Trying to cut off alternatives by limiting interoperability or integration
options would be fraught with danger, because it would enrage customers,
accelerate the divergence of the open source platform and have other undesirable
results.

Despite this, Microsoft is at risk of following this path, because of the
corporate delusion that goes by many names: ``better together'', ``unified
platform'' and ``integrated software''.

Microsoft hopes that these outmoded approaches to software integration will
attract and keep international markets, governments, academics and, most
importantly, innovators, safely within its sphere of influence. But they
won't.

Exciting new networked applications are being written. Time is not standing
still.

Microsoft must survive and prosper by learning from the open source
movement.

To avoid dire consequences, Microsoft should tolerate and embrace the
diversity of the open source approach, especially when network-based integration
is involved.

Many clever and motivated people out there have many different reasons to
avoid buying directly into a Microsoft proprietary stack. Microsoft must employ
diplomacy to woo these accounts; stubborn insistence will be counterproductive
and ineffective.

Microsoft cannot prosper during the open source wave as an island, with a
defence built out of litigation and proprietary protocols.

There is a new frontier, where software ``collectives'' are being built with
ad hoc protocols and clustered devices. Robotics and automation demand
sophisticated new ways of thinking.

Consumers have an unslakable thirst for new forms of entertainment. And
hardware vendors continue to push towards architectures that will fundamentally
change the way that software is built by introducing fine-grained concurrency
that simply cannot be ignored.

There is no clear consensus on systems or application models for these areas.
Useful software written above the level of the single device will command high
margins for a long time to come.

Stop looking over your shoulder and invent something!

David Stutz resigned from Microsoft on February 7 after 10 years with the
software titan. His last post was group program manager of the "shared source"
initiative - a crucial effort to head off the threat from open source software
by sharing more Microsoft code with universities and industry partners. This is
a "sanitised" version of the email he sent to colleagues on his departure,
published on his website at www.synthesist.net